RCEP’s Environmental Co-Benefits: A Net Impact Assessment of NO2 Emissions from China-ASEAN Green Agri-Trade

The environmental impact of trade liberalization hinges on a central tension between its ‘scale effect’ and its ‘technique and composition effects’. This study uses the Regional Comprehensive Economic Partnership’s (RCEP) influence on China-ASEAN green agricultural trade as a quasi-natural experiment to test the net outcome of this conflict. Leveraging panel data from 2003–2023 and a combined Difference-in-Differences (DID) and Instrumental Variables (IV) methodology, we find that while RCEP-driven agricultural expansion (the scale effect) did significantly increase NO2 emissions by 21.80 units (p = 0.011), the total effect of RCEP was counter-intuitively and significantly negative. The agreement produced a context-specific environmental co-benefit, achieving a net reduction of 99.45 μmol/m2 of NO2 (p = 0.008). The agreement produced a specific reduction in combustion-related air pollution, achieving a net reduction of 99.45 μmol/m2 of NO2 (p = 0.008). We caution that this outcome is contextual: it is driven not only by a still-weak green technology effect (a 0.55 unit reduction, p = 0.095) but more critically by a structural shift in trade towards lower-emission fruit and vegetable products (coefficient = −0.13, p = 0.077), suggesting that environmental gains are currently contingent on product composition rather than broad decarbonization. This reveals that environmental pressures from scale are, for now, being offset by structural optimization, highlighting the urgent need for refined emission monitoring and targeted green policies within RCEP to solidify these environmental gains.